Toward stronger supply network resilience: some influential capabilities

The vulnerability of global supply chains (SCs) can be cruelly exposed when a major crisis comes along. A perfect example of this occurred when the COVID-19 pandemic took adversity to new heights.Predictably, this episode increased the importance of SC resilience capabilities. The conventional “engineering” view deems resilience as the capacity to recover quickly and return to a pre-disruption state or an even stronger one. From this perspective of supply chain resilience (SCR), attaining equilibrium is fundamental. It likewise considers how long the SC can survive in its disrupted state and the time needed to become fully operational again. Assumptions are made about effective contingencies and control that have more recently been condemned as unrealistic.Much prior research into supply network resilience (SNR) has limited its focus to single levels. Such an approach fails to recognize that a SN operates at multiple levels and functions as a “complex adaptive system” (CAS).This offers a “social-ecological” perspective of resilience where the SC is an open system of organizations all interconnected across such as business, economic, social and political environments. The connection of internal mechanisms with the environment shapes the structure of the SN and how it functions.Resilience enables normal stability while the SN also adjusts and remodels itself as the external environment evolves. The fact that CASs operate at different levels means that the resilience of SCs is likewise developed across these levels.Different implications exist for resilience when an SN is deemed a CAS. With the engineering position, change is a threat to the prevailing system. On the contrary, a major external shock presents scope for a stronger system to emerge as it adapts to the change. This occurs due to various transformations that enable both balance and “homeostasis” at different points.The dynamic nature of an SN ensures it operates across multiple institutional and geographical boundaries. It therefore follows that SNR reflects resilience capabilities at individual, group and company levels that collectively infuse the various SCs that constitute the SN.Certain scholars consider pre, during and post as the three disruption phases. In essence, these respectively align with key capabilities to anticipate and prepare, react and recover and learn and grow. Levels and phases are still recognized in the social-ecological view of SNR. However, instead of being chronological, phases indicate how CASs are integrated at different levels.A key premise of another framework is that SN evolves through “exploitation”, “conservation”, “release” and “reorganization” phases that correlate with the pre, during and post-stages of disruption. In addition to resilience, these four CAS development phases address how system elements connect. During these phases, the degree of SN potential, flexibility and SNR fluctuate, depending on the resources and capabilities amassed. Relationship formation is crucial, as it determines the level of connectedness across the SN at each stage. In addition, these and other factors like SC components and processes enable the CAS structure to be reconfigured in line with the changing environment.Dynamic capabilities within a firm determine its capacity to adapt and transform in the face of adversity. They arise from the ability to develop, assimilate and rearrange internal and external resources and capabilities to navigate environmental and market changes. According to extant literature, a wide array of capabilities has a similar scope to shape SCR. Their suitability depends on what approach to resilience is adopted. For instance, agility, flexibility, visibility, velocity, redundancy and self-organization are proposed as key capabilities for social-ecological resilience.Statsenko et al. (2024) seek further insight through qualitative research using multiple case studies. Semi-structured interviews were conducted with key decision-makers from 17 firms linked to the Australian Defence Manufacturing SN (ADM SN). Interviews took place during COVID-19 restrictions, so they were conducted by telephone or online. Additional data were obtained through interviews with Australian Defence SC companies and other secondary sources.A principal aim of this work is to identify the resilience capabilities used by the participating firms during each phase of disruption caused by the global pandemic. During the exploitation and conservation phases, firms benefitted from:Outsourced production and manufacturing to foreign intellectual property are defining features of ADM SN. Market- and alliance-based partnerships are therefore common to many SCs. Reliance on low-cost, low-inventory and just-in-time principles requires major companies in this study to have SC visibility. Greater understanding of SC issues upstream can then emerge. In conjunction with transparent information, visibility helps facilitate the flexibility needed for multiple sourcing.For small and medium-sized companies (SMEs), alternative sourcing was more problematic due to reliance on customized parts. The lack of alternative options meant higher dependence on established partners. This was something of a doubled-edged sword, though. Seeking different vendors risked damage to existing relationships and the firm’s reputation. On the other hand, remaining loyal meant the SN was less flexible.In certain cases, visibility attained by mapping value streams enabled a switch to local suppliers prior to global shocks. However, response to the turbulence was limited for smaller manufacturers that lacked both SC visibility and distribution control. Such difficulties could be compensated by increased collaboration and knowledge exchange among SC partners.Widely documented impacts of COVID-19 had major implications during the release phase, such as lead times, cost of parts and shipping. It also ensured that control of upstream SCs was often non-existent for many organizations.Keeping the business operational became the main focus as old structures gave way to new ones. Velocity, process flexibility and redundancy were critical here. Their function as resilience capabilities was evident in such as:Some companies demonstrated their flexibility when manufacturing personal protective equipment during the pandemic. Such transitions helped keep businesses afloat. Visibility and speed were also crucial to the necessary reconfiguration of production processes at this time.Firms additionally signalled their resilient qualities through collaboration across their overseas SCs to ensure fast resumption post lockdown. Data also revealed that informal collaborative arrangements like employee exchange and resource-sharing helped firms attain SC redundancy at local levels.In the reorganization phase, operational flexibility, redundancy and visibility are to the fore. At this point, supplier geography became the focus of risk assessment. This led to some companies diversifying production lines and creating a stronger SN to:This shift to localized SCs based on collaboration between primary companies and SMEs increased visibility, flexibility and speed of SN. Resilience was boosted accordingly.Based on findings here, practitioners are advised to:The review is based on “Supply network resilience capabilities: a social–ecological perspective” by Larissa Statsenko, Ruchini Senarath Jayasinghe and Claudine Soosay, published in Supply Chain Management: An International Journal.